Foreign Policy & Security 2019/9

June 2019

EUROPEAN DEFENCE ECOSYSTEM, THIRD COUNTRIES’ PARTICIPATION AND THE SPECIAL CASE OF TURKEY Emre Kürşat Kaya | Research Fellow, EDAM Foreign Policy & Security 2019/9

EUROPEAN DEFENCE ECOSYSTEM, THIRD COUNTRIES’ PARTICIPATION AND THE SPECIAL CASE OF TURKEY Emre Kürşat Kaya | Research Fellow, EDAM

Executive Summary

During the last three decades, the European The participation of the into defence Union acquired a vast range of exclusive and shared projects in the post- era is critical to ensure the competences. Although these competences concentrated success of these initiatives. The United Kingdom is the on economic integration, there have been significant third largest European major arms exporter. Yet, conditions transfers of sovereignty from national to supranational level should be applicable to all third countries. Any special in other policy areas. Despite these developments, further treatment offered to the UK will trigger heavy critics by other integration in the Common Security and Defence Policy has candidates. been limited. Since the initiation of the CSDP at the Franco- British Saint-Malo summit in 1998 and until the European Although Turkey’s current political relations with EU Council of 2013, it has mostly been a taboo to discuss member states and institutions have deteriorated, it keeps security and defence matters at the supranational level. strong economic ties with the Union. Notably, Turkey plays an important role both as a defence exporter and importer for CSDP has consolidated its rank as a high topic in the the EU. The EU is the second largest client of Turkey (after agenda in 2017 with the launch of the European the US) representing 25,4% of its defence and aerospace Defence Fund (EDF) and the Permanent Structured exports1. Ankara represents 3% of total EU exports of major Cooperation (PESCO). Both initiatives are unique for different arms and is a key client for member states such as and reasons. The EDF is the first Commission-led defence (respectively 14% and 10% of their total arms exports)2. initiative. As a treaty-based initiative, PESCO requires There are also strong ties between the Turkish defence firms participant member states to accept binding commitments. and their European counterparts. Turkish companies are part of European projects such as the Cougar MK1 and the The first two waves of PESCO projects (for a total of 34 Airbus A400M. Moreover, large European companies are projects), as well as the first EDF-funded research projects, active in the making of key Turkish defence products (i.e. have already been launched. The first concrete results from Agusta Westland – ATAK T129; MBDA & Thales – Air and both initiatives are expected in 2019. This year will also Missile Defence Systems; BAE Systems – TF-X). represent an important period during which the governance rules should be established, most notably regarding third- This paper aims to present an overview of the latest country participation. developments in the ’s new defence ecosystem and to analyse its meaning for potential partner Non-EU countries are waiting for the announcement of countries such as Turkey. The paper first presents the main clear conditions in order to participate in joint projects with components of the EDF and PESCO. It then examines the their European partners. This group of countries includes current state of affairs regarding the conditions for third- Turkey, , the United States, and soon the United country participation to these initiatives. Finally, the analysis Kingdom. The conditions to participate in PESCO or EDF focus on the case of Turkey through its defence industrial projects will need to consider technical requirements and relations with the EU and its potential participation to the political sensitivities. EDF and PESCO.

1 Savunma ve Havacılık Sanayii, Performans Raporu, 2017. Accessed on: February 25, 2019.

2 SIPRI Fact Sheet, March 2018, Trends in International Arms Transfers, 2017. Accessed on: February 25, 2019. 1 Foreign Policy & Security 2019/9

Introduction

Divergent defence industry policies of the EU member states of PESCO and the EDF as the United Kingdom, one of the are a handicap for the Union’s place in global competition. top three arms exporters in the EU, is set to leave the Union. Despite representing 27% of global arms export for the 2013- Furthermore, the exclusion of the United States will have 2017 period3, the misuse of resources due to the duplication negative effects on the initiatives. The US is playing a key of projects limits a greater potential for the Union and its role not only in the security but also defence industry of members on the global market4. The Permanent Structured its NATO Allies. Certainly, Brussels cannot offer a custom- Cooperation (PESCO), the (EDF) made entry ticket to the UK or the US. Such a decision would and the Coordinated Annual Review on Defence (CARD) ultimately alienate other partner countries. aim to enable the EU to achieve strategic autonomy5. Ankara plays an increasingly assertive role in the global PESCO and the EDF offer concrete opportunities for greater arms trade. In the 2008-2013 period Turkey represented defence cooperation. Despite being labelled a “European 0.4% of the global arms exports. It increased its share of the Army” initiative, PESCO is first and foremost a defence total global arms exports to 0.8% (+145%) for the 2013-2017 cooperation framework. Most of the projects are about the period and became the 9th largest European major weapons co-development of a specific defence product such as the exporter7. While increasing its export numbers, Turkey Tiger Mark III Attack Helicopter or a Counter-Unmanned continues to be a significant importer of European defence Aerial System6. So far, the EDF which consist of two windows products. Ankara is a key importer for Spain and Italy (a research and a capability one), finances research (respectively 14% and 10% of their total exports)8. However, projects. The Commission opened a call for proposals to Turkey also has political differences with member states and finance capability development projects in March 2019. The longstanding tensions over Cyprus. This contrasting picture call focuses on a Eurodrone project, artificial intelligence of Turkey’s relations with EU member states must be kept in and cyber defence. mind when analysing its participation to European defence projects. The rules for third-country participation is key to the success

3 Ibid.

4 , The case for greater EU cooperation on security and defence. https://ec.europa.eu/commission/sites/beta-political/files/defending-europe-factsheet_en.pdf. Accessed on: February 25, 2019.

5 Strategic Autonomy: the ability to pursue its own interests without being constrained by other states. Sven Biscop, July 2018, Letting Europe Go Its Own Way: The Case for Strategic Autonomy, Foreign Affairs, https://www.foreignaffairs.com/articles/2018-07-06/letting-europe-go-its-own-way. Accessed on: February 25, 2019.

6 For more PESCO projects: https://www.consilium.europa.eu/media/37028/table-pesco-projects.pdf

7 SIPRI Fact Sheet, March 2018, Trends in International Arms Transfers, 2017. Accessed on: February 25, 2019.

8 Ibid. 2 Foreign Policy & Security 2019/9

EDF and PESCO: Exceptions to The Rule?

Since the initiation of the CSDP at the Franco-British Saint- CSDP has consolidated its rank as a high topic in the Brussels Malo summit in 1998 and until the of agenda in 2017 with the launch of the European Defence 2013, it has mostly been a taboo to discuss security and Fund (EDF) and the Permanent Structured Cooperation defence matters at the supranational level. When the topic (PESCO). Both initiatives are unique for different reasons. came on the table, it mostly resulted in empty promises and The EDF is the first Commission-led defence initiative. As a unrealistic goals. treaty-based initiative, PESCO requires participant member states to accept binding commitments.

Figure 1: The European Defence Ecosystem9

Among all the recent initiatives, the European Defence covers 100% of costs of research projects in defence Fund stands out as the only institution-driven one, at the technologies in member states and associated third- contrary of the usual member states-driven initiatives in the countries. The research window is completed by a capability field of defence and security. Its launch coincided with the one, the European Defence Industrial Development PESCO ‘Sleeping Beauty’ speech of President Juncker10. Programme (EDIDP), which covers 20% of costs generated The primary aim of the EDF is to encourage member by the joint development or acquisition of defence products. states to cooperate more deeply in their defence industrial The initial budgets, until 2020, are 90 million euros for the planning and production. The Commission showcased the research window and 500 million euros for the capability need for such an initiative with the following terms: “too little one12. So far only research projects have been funded by coordination in defence planning leads to an inefficient the EDF. However, the Commission recently opened a call use of taxpayers’ money, unnecessary duplication and for proposals for financing capability projects via the EDIDP suboptimal deployability of ”11. under the 2019-2020 EU budget. Although the initial 590 million euros EDF budget is a modest sum, the potential The European Defence Fund has two separate but impact of the envisaged 13 billion euros under the 2021-2027 complementary windows. An initial research window, the budget period cannot be underestimated. Preparatory Action on Defence Research (PADR), which

9 European Defence Agency, https://www.eda.europa.eu/images/default-source/projects-nre/capture.jpg, Accessed on: February 25, 2019.

10 European Commission, June 2017, Speech by President Jean-Claude Juncker at the Defence and Security Conference Prague: In defence of Europe, http://europa.eu/rapid/press-release_SPEECH-17-1581_en.htm Accessed on: February 25, 2019.

11 European Commission, June 2017, Communication from The Commission to The European Parliament, The Council, The European Economic and Social Committee And The Committee of The Regions Launching The European Defence Fund, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017DC0295&from=EN Accessed on: February 25, 2019.

12 Ibid. 3 Foreign Policy & Security 2019/9

Figure 2: The Windows of the European Defence Fund, European Commission.13

The European Defence Fund and PESCO complete each into PESCO. Protocol 10 also clearly states the obligations of other. The European Commission wants these initiatives to participating member states to contribute into multinational combine projects. It offers an extra 10% financing on the top forces, supply battle groups and “enhance the availability, of the 20% proposed for capability projects if the project is interoperability, flexibility, and deployability of their forces”16. also a PESCO one14. As stated above, PESCO is not about a , but rather effective defence cooperation. Seventeen PESCO PESCO introduced an unprecedented potential for commitments over a total of twenty are about capability cooperation in security and defence at the EU level. The development. Regarding this aspect, PESCO requires particularity of PESCO is in its name; it is a permanent and participating member states to: structured cooperation. Thus, PESCO offers a framework to improve cooperation among participating member states. (a) cooperate, as from the entry into force of the Treaty The initial participation to PESCO is voluntary. However, of Lisbon, with a view to achieving approved once part of it, member states have binding commitments objectives concerning the level of investment to fulfil. expenditure on defence equipment, […] (b) bring their defence apparatus into line with each PESCO has an operational and a capability development other as far as possible, particularly by harmonising dimension. Regarding the operational dimension, the the identification of their military needs, by pooling Treaty on European Union (Article 42.7) states that PESCO and, where appropriate, specialising their defence participating states are the ones willing and able to fulfil “the means and capabilities, and by encouraging most demanding missions”15. Although there is not a clear cooperation in the fields of training and logistics; definition of what the Treaty means by most demanding (c) work together to ensure that they take the necessary missions, this term shows the high level of ambition entrusted measures to make good […] the shortfalls perceived

13 European Commission, June 2017, Communication from The Commission to The European Parliament, The Council, The European Economic and Social Committee And The Committee of The Regions Launching The European Defence Fund, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017DC0295&from=EN Accessed on: February 25, 2019.

14 European Commission, June 2018, EU Budget for the Future: The European Defence Fund, https://ec.europa.eu/commission/sites/beta-political/files/budget-may2018-eu-defence-fund_en_0.pdf Accessed on: February 25, 2019.

15 Consolidated Version of The Treaty On European Union, https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/DOC_1&format=PDF

16 Consolidated version of the Treaty on European Union, Protocol (No 10) on permanent structured cooperation established by Article 42 of the Treaty on European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12008M%2FPRO%2F10 4 Foreign Policy & Security 2019/9

in the framework of the ‘Capability Development governance level where the Council takes the decisions by Mechanism’; […] unanimity voting under its PESCO format (only participating (d) take part, where appropriate, in the development of member states are allowed to vote). The second is the major joint or European equipment programmes in specific project’s level. There, each project has its own the framework of the European Defence Agency17. governance structure decided and organized by its participating member states18. PESCO has a two-level governance structure. The first is the

Third-Country Participation: A Contrast Between Technical Needs and Political Realities

Before starting the deeper analysis of the rules for regarding the derogations for third-country participation. third-country participation, the definition of the participating The text makes a clear distinction between associated and actor should be made for each of the initiatives. Participation non-associated third-countries. An associated third-country in a PESCO project is made at the state level. Although the is a European Free Trade Association (EFTA) member which action will probably be undertaken by a sub-entity, the is also a member of the European Economic Area (EEA) participant is the country. Thus, the invitation to participate (Iceland, Liechtenstein and ). Any other third-country to the project goes to the responsible branch of the is a non-associated one. government. The participating actor of an EDF project is the company or agency completing the action. Therefore, the There are two scenarios in which a non-associated third- entity alone enters the call for proposals. This actor can be a country entity can become an eligible applicant. It can private or public defence firm, a public entity, an academic either (1) apply through its subcontractor established in the institution or even a think tank. Union or in an associated third-country, or it can (2) offer its resources and services established in a non-associated As noted in the introduction, the rules of governance for both third-country through cooperation with the beneficiaries of initiatives are under making and thus subject to change. Yet, an action. For both options, legislators have established based on documents from the European institutions and strict conditions to protect the interests of the EU and its other sources active in the Brussels “bubble”, we can draw member states. the main lines of the keys to access to both initiatives for non-EU countries. In the first case scenario, if deemed necessary for achieving the objectives of an action, an applicant which is established The EDF is the most established one regarding the rules in the EU and is controlled by a non-associated third-country which will be applied to third-country participation. Based entity can be eligible. In order to become a beneficiary, the on the first readings of the Commission proposal from entity in question must fulfil three conditions: both the Parliament19 and the Council20, the direction of the final provisions can be deducted21. This is especially true 1. There must be no restrictions (on infrastructure,

17 Consolidated Version of The Treaty On European Union, https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/DOC_1&format=PDF

18 Council of the European Union, November 2017, Notification on Permanent Structured Cooperation (PESCO) to the Council and to the High Representative of the Union for Foreign Affairs and Security Policy. https://www.consilium.europa.eu/media/31511/171113-pesco-notification.pdf Accessed on: February 25, 2019.

19 European Parliament, November 2018, Report on the proposal for a regulation of the European Parliament and of the Council establishing the European Defence Fund, http://www.europarl.europa.eu/doceo/document/A-8-2018-0412_EN.html?redirect Accessed on: February 25, 2019.

20 Council of the European Union, November 2018, Proposal for a Regulation of The European Parliament and of The Council establishing the European Defence Fund (First reading) - Partial general approach.

21 On February 20, 2019, the Commission has stated that the Parliament and the Council have reached a provisional agreement. For more details: http://europa.eu/rapid/press-release_IP-19-1269_en.htm Accessed on: February 25, 2019. 5 Foreign Policy & Security 2019/9

assets, know-how, etc.) exercised from the non-associated third-country or its entity on the Perhaps the most important detail regarding the second beneficiary. scenario is that any costs generated outside of the Union 2. There must be no access to sensitive information or an associated third-country is not eligible for funding. by the non-associated third-country or its entity; Thus, although being able to participate in a common employees of the beneficiary must have national defence project under the EDF, an entity established in a security clearance given by the host member state. non-associated third-country cannot receive direct funding. 3. There must be no transfer of intellectual property This scenario can benefit entities which are looking to enter during and after the action (with a time limit to be a European defence project to share and receive precious yet established) from the beneficiary to any entity know-how and to obtain a certain level of technology transfer outside the Union or associated third-countries in exchange of investments. without the approval of the Member State in which the beneficiary is established22-23. While a third-country entity can be part of a consortium responding to a call for proposals for the EDF (proactive), This scenario is offering a great opportunity for third- its participation to a PESCO project requires an invitation country entities which are already established within the EU. from project members (reactive). Here, project members Through their EU-based subsidiaries, these entities can be refer to PESCO participating members states which are part part of European-wide projects and benefit from the Fund. of a specific project. As a member-states driven initiative, However, the transfer of technology, which is a critical point any major decision requires the approval of all participating when it comes to common defence projects is restricted. member states. In this regard, the general rules for third- The regulation shows that EU institutions agree to limit as country participation, which requires a separate Council much as possible the sharing of sensitive information with decision, have not been clarified yet. any actor outside of the Union during the action. Depending on the final version of the text, restrictions on technology The 2017 Council decision establishing PESCO offers transfer could continue beyond the end of the action. an overview of the process. It starts with an invitation from projects members to a third-country which can offer In the second case scenario, if there is no competitive substantial added-value without creating dependency. substitute available in the EU or an associated third-country, Then, the Council in its PESCO format and through a beneficiaries of the action may enter into a cooperation with unanimity vote decides whether the third-country adheres an entity established in a non-associated third-country. to the general rules of participation. If the Council makes a Under this cooperation, the infrastructure, resources, positive decision, then the projects members and the third- facilities and/or assets of this entity may be put at use for the country sign an administrative arrangement entailing the purpose of the action. In this scenario too, there are critical details of the cooperation24. limitations regarding the access to sensitive information and the transfer of technology. While the Council document A working paper25 on the rules for the exceptional participation focuses on restricting access to sensitive information by of third-countries is under discussion. The working paper unauthorised entities, the Parliament version of the document proposes to adapt the general rules for participation on a calls for the application of the same three conditions as the project-by-project basis. Thus, a third-country would require first scenario. a Council approval for each project it plans to participate.

22 European Parliament, November 2018, Report on the proposal for a regulation of the European Parliament and of the Council establishing the European Defence Fund, http://www.europarl.europa.eu/doceo/document/A-8-2018-0412_EN.html?redirect Accessed on: February 25, 2019.

23 Council of the European Union, November 2018, Proposal for a Regulation of The European Parliament and of The Council establishing the European Defence Fund (First reading) - Partial general approach. http://data.consilium.europa.eu/doc/document/ST-14094-2018-REV-1/en/pdf Accessed on: February 25, 2019.

24 Council of the European Union, December 2017, Council Decision establishing Permanent Structured Cooperation (PESCO) and determining the list of participating Member States, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017D2315&from=EN Accessed on: February 25, 2019.

25 Jacopo Barigazzi, October 2018, Politico, UK and US will be allowed to join some EU military projects, https://www.politico.eu/article/pesco-military-uk-and-us-will-be-allowed-to-join-some-eu-military-projects/ Accessed on: February 25, 2019. 6 Foreign Policy & Security 2019/9

Moreover, the article mentions the desire of member states Fund is first and foremost done at the entity level, which to have adherence to EU values as one of the general rules. mostly consists of defence companies. While the political This criterion has been specifically introduced to potentially conjuncture has always a significant weight on defence obstruct the participation of Turkey, a key NATO ally, to deals, its impact might be contained under the leadership PESCO given that Greece and Austria oppose Ankara’s of the Commission. The picture is different when it comes participation in common EU projects26. to participation in PESCO. By requiring a Council decision for every third-country participation to a PESCO project, the When comparing the rules for third-country participation process will be highly political. Moreover, this decision will to the EDF and PESCO, the criteria to participate in the have to be taken through a unanimity vote, which further former come forward as more technical. Participation in the complicates the participation of countries such as Turkey.

The Place of Turkey in the European Defence Ecosystem

Ankara plays an increasingly more assertive role in global and their European counterparts. One of such collaborations arms sales. Between the periods of 2008-2013 and exists between the Turkish Aerospace Industries Corporation 2013-2017, it increased its percentage of the total global (TAI) and Airbus. TAI produces several parts of Airbus arms exports from 0.4% to 0.8% (+145%) and became the products such as the Eurocopter Cougar MK1 and the 9th largest European major weapons exporter27. Turkey military transport aircraft Airbus A400M30. plays an important role both as a defence exporter and importer for several member states. The EU is the second Secondly, European companies are active in the making of largest client of Turkey (after the US) representing 25,4% key Turkish defence products. Most notably, since 2009 of its defence and aerospace exports28. Ankara represents the Italian giant Leonardo through its subsidiary Agusta 3% of total EU exports of major arms and is a key client for Westland is a partner of TAI in the production of the T129 several member states such as Spain and Italy (respectively ATAK Multirole Combat helicopter. In another significant 14% and 10% of their total arms exports)29. partnership, TAI and BAE Systems collaborate in the production of the Turkish fighter aircraft, the 31TF-X . BAE Turkish and European defence companies are also Systems is providing technological support to the Turkish intensifying their cooperation. There are three common manufacturer. The most recent example of European types of interaction. The first one is through the participation companies’ presence in the production of a Turkish defence of Turkish firms into European defence projects, without product is the indigenous Air and Missile Defence System necessarily being under the EU umbrella. Here, Turkish project. ASELSAN and ROKETSAN will benefit from the companies have been active in EU projects such as experiences of EUROSAM, a joint venture of MBDA and HYPERION (ASELSAN) and TALOS (ASELSAN, STM). There THALES32. are also established collaboration between Turkish firms

26 Ibid.

27 SIPRI Fact Sheet, March 2018, Trends in International Arms Transfers, 2017. Accessed on: February 25, 2019.

28 Savunma ve Havacılık Sanayii, Performans Raporu, 2017. Accessed on: February 25, 2019.

29 SIPRI Fact Sheet, March 2018, Trends in International Arms Transfers, 2017. Accessed on: February 25, 2019.

30 For more information in TAI programs: https://www.tai.com.tr/urunler/komponent-uretimi Accessed on: February 25, 2019.

31 BAE Systems, BAE Systems signs Heads of Agreement for a future contract with Turkish Aerospace Industries for TF-X Programme, https://www.baesystems.com/en/article/bae-systems-signs-heads-of-agreement-for-a-future-contract-with-turkish-aerospace-industries-for-tf-x-programme Accessed on: February 25, 2019.

32 MBDA, Turkey contracts EUROSAM, ASELSAN and ROKETSAN to define its future indigenous air and missile defense system, https://www.mbda-systems.com/2018/01/05/turkey-contracts-eurosam-aselsan-and-roketsan-to-define-its-future-indigeneous-air-and-missile-defense-system/ Accessed on: February 25, 2019. 7 Foreign Policy & Security 2019/9

Table 1: Examples of Turco-European Defence Cooperation.

The third type of interaction is European companies’ cooperated with the Greek Hellenic Aerospace Industry34. subsidiaries in Turkey. Here, an example is the This is a precedent for cooperation with potentially rival establishment of RBSS in 2016 by the Turkish BMC (51%), countries under a Commission-led project. Secondly, the the German Rheinmetall AG (39%) and the Malaysian Etika selection process will be based on technical requirements Strategi (10%)33. Several other European companies have which can be met by competent Turkish companies. The long owned subsidiaries in Turkey (i.e. THALES – Yaltes, applications will be assessed by the responsible Commission Leonardo – Selex ES). bodies. Although the political situation between Turkey and EU member states can still play a role, this process may put In the last two decades, the Turkish defence industry more emphasis on technical criteria. gained both in volume and quality of its products. It has also established a culture of collaboration with European For both initiatives, the potential CAATSA sanctions looming partners. These developments designate Turkey as a over the Turkish defence industries must be carefully strong candidate as an active third-country participant in examined. So far, European foreign and security policy EU defence initiatives. However, Turkey has also political circles have mainly focused on CAATSA’s aspects covering differences with member states and longstanding tensions punitive actions towards the Russian energy and aluminium over Cyprus. This contrasting picture of Turkey’s relations sectors. There is no indication regarding the position the with EU member states must be kept in mind when analysing EU is going to take towards a country under CAATSA its participation to European defence projects. sanctions. Additionally, the measures against the Turkish defence industries can affect European firms cooperating Although Turkey’s participation in PESCO is a complex with them. Thus, leave aside new partnerships, this situation political issue for abovementioned reasons, Turkish could jeopardize Turkey’s ongoing collaboration with BAE companies may have higher chances in EDF projects. As Systems in the production of the TF-X and its cooperation previously mentioned, third-country participation in PESCO with MBDA and Thales for the indigenous Air and Missile will be highly politicized due to the use of unanimity vote Defence System project. These companies are deeply for every candidate. Countries such as Cyprus, Greece integrated into the lucrative US defence market. They would or Austria can potentially use their veto. For instance, in likely avoid clashing with American interests. the past, Cyprus has vetoed Turkey’s application to the European Defence Agency. Finally, Almaz-Antey (the main producer of the S-400 air and missile defence system) is also under Brussels’ sanctions The prospects for the participation of Turkish defence regime against Moscow. Although European sanctions companies to EDF projects are more promising. First, Turkish towards Almaz-Antey only cover asset freeze and travel ban, companies have a history of participation to Commission-led Turkey’s procurement from the Russian giant could impact defence programs (i.e. HYPERION, TALOS). Furthermore, its prospects for access to European initiatives. within the TALOS project, ASELSAN and STM have even

33 İbrahim Sünnetçi, Defence Turkey, A Look at the Turkish Defense Industry Land Platforms/Systems Sector, http://www.defenceturkey.com/en/content/a-look-at-the-turkish-defense-industry-land-platforms-systems-sector-3027#.XHP72egzbb0 Accessed on: February 25, 2019.

34 For the list of participants: http://www.ttinorte.es/en/?page_id=340 Accessed on: February 25, 2019. 8 Foreign Policy & Security 2019/9

Key Findings

Since 2017, the European Union launched defence initiatives to participate in an EDF or a PESCO project are different in at an unprecedented pace and potential. Although the final nature. While under the lead of the Commission, the EDF outcomes will once more depend on the member states’ process is more technical, participation to a PESCO project willingness to commit to further integration, the realistic goes through a Council decision and thus is highly political. objectives of the new frameworks are promising. The EDF Turkey, through its ascending defence industry and deep and PESCO have created a momentum for cooperation defence industrial relations with several EU member states, among member states’ defence policies. The first PESCO is another key candidate to both PESCO and the EDF. Yet, and EDF projects are expected to demonstrate their initial Ankara’s participation to the former is jeopardized by the results this year. 2019 is also the year the governance rules unanimity vote at the Council. The fractured relations of for both initiatives will take their final shape. Turkey and several member states increases the likelihood of a veto at the Council. When it comes to the participation of The success of PESCO and the EDF will also depend on Turkish defence companies to the Defence Fund, the picture the preservation or creation of cooperation with partner is slightly different. Under the leadership of the Commission, countries. Third-countries such as the US and soon the impact of the political tensions could be minimized. the United Kingdom are deeply integrated with several Then, competent Turkish companies will have to get through member states’ defence industries. Their participation in strict technical requirements. the initiatives is crucial. However, to fulfil the goal to create a more autonomous defence industry, the EU can also not The picture which surfaces from this paper is a mitigated offer carte blanche to these countries. A balance must be one. European Union’s new initiatives are creating potentially built between receiving added value and not creating new fertile frameworks for the member states’ defence industries dependencies. to reach their level of ambition. Yet, past experiences have demonstrated that especially in the field of security and The rules for third-country participation are likely to be built defence, agreements are easier to make than to put into with the participation of these two countries in mind. Yet, practice. The rules for third-country participation is key to the they should be universally applicable. If there is favouritism success of the initiatives. While the Union and its member for any specific country, this would highly delegitimize the states are looking for added value from partners countries, Union in its relations with other third-countries. The conditions they are also avoiding to create new dependencies.

9 Foreign Policy & Security 2019/9

June 2019

EUROPEAN DEFENCE ECOSYSTEM, THIRD COUNTRIES’ PARTICIPATION AND THE SPECIAL CASE OF TURKEY Emre Kürşat Kaya | Research Fellow, EDAM